Everest Re Group Reports Third Quarter 2021 Results

Everest Re Group, Ltd. (“Everest” or the “Company”) today reported its 2021 third quarter results.

Third Quarter 2021 Highlights

• Gross written premium (“GWP”) growth of 25% year over year to $3.5 billion
• Insurance segment GWP growth of 43% year over year to $1.0 billion. The second consecutive quarter above $1.0 billion GWP
• Reinsurance segment GWP growth of 19% year over year to $2.5 billion
• Attritional combined ratio of 87.9%
• Excellent Insurance segment attritional combined ratio of 90.3%, a 3.9-point improvement year over year
• Pre-tax Underwriting loss of $323 million inclusive of pre-tax net catastrophe losses of $635 million
• Robust net investment income of $293 million, led by outstanding alternative asset performance of $170 million
• Common share repurchases of $160 million during the quarter and $200 million year to date
• Annualized year to date Total Shareholder Return of 13.2%

Everest Re Group President & CEO Juan C. Andrade commented on the Company’s results:

“During the third quarter of 2021, Everest made significant progress toward the strategic plan objectives detailed in the June investor day presentation. We achieved outstanding top line premium growth across both of our insurance and reinsurance businesses, continued to improve the attritional profitability for our Insurance Division, remained focused on risk appetite discipline and the diversification of our business, demonstrated strong expense management, delivered excellent investment income results, opportunistically reduced our cost of capital, and returned capital to our shareholders. Despite the high frequency and severity of the natural catastrophe activity in the quarter, we also benefited from the de-risking of the CAT portfolio and we remain on track to achieve our total shareholder return objective. We continue to consistently demonstrate our ability to relentlessly execute against our plans regardless of the external environment.”

Summary of Third Quarter 2021 Net Income and Other Items

• Net income (loss) of $(73.5) million, equal to $(1.88) per share vs. net income of $243.1 million, equal to $6.07 per share in the same period during 2020
• Net operating income (loss) of $(52.6) million, equal to $(1.34) per share vs. net operating income of $97.0 million, equal to $2.42 per share in the same period during 2020
• Underwriting loss of $323.4 million inclusive of catastrophe losses from Hurricane Ida and European Floods during the quarter, in the amount of $635 million net of recoveries and reinstatement premiums ($555 million in reinsurance and $80 million in Insurance)
• GAAP combined ratio of 112.2% which includes 26.2 points of catastrophe losses vs. 14.0 points of catastrophe losses in the same period during 2020
• No change to Covid-19 Pandemic (“Pandemic”) ultimate loss estimates of $511 million
• Operating cashflow was $1.2 billion vs $1.1 billion a year ago. Year to date operating cashflow was $2.8 billion vs $2.2 billion a year ago.

The following table summarizes the Company’s net income and related financial metrics.

The following information summarizes the Company’s underwriting results, on a consolidated basis and by segment – Reinsurance and Insurance, with selected commentary on results by segment.

Reinsurance segment

• Reinsurance achieved excellent growth in the quarter, growing premium 19% year over year to $2.5 billion. The growth was driven by continued partnership with our core clients and Everest’s position as a preferred reinsurance platform. All target classes of business and geographies saw growth in the quarter, and our portfolio is benefiting from improved economic conditions and strong rate performance by our cedants.
• The attritional combined ratio for the quarter of 87.1% reflects the deliberate and targeted shaping of our portfolio to maximize long term results with a higher mix of pro rata structures, an improved balance of property and casualty exposures, prudence in loss ratio selections, and continuous expense discipline. The operating expense ratio of 2.3% is world class and demonstrates the scalability of our franchise.
• Reinsurance CAT losses for the quarter totaled $555 million net of recoveries and reinstatement premiums, driven by Hurricane Ida and the Berndt flooding event in Europe. The cumulative, deliberate, and purposeful actions we have taken to reduce volatility have reduced our company’s risk profile.

Insurance segment

• Everest Insurance reported another outstanding premium quarter with record quarterly growth of 43% driving over $1.0 billion in gross written premium for a second consecutive quarter. The exceptional growth in Q3 was driven by increasingly favorable economic conditions, new business growth, and the combined impact of strong renewal retention and a continuing favorable rate environment.
• The Insurance segment also continues to expand attritional underwriting margins with improvement in the loss and expense ratio and delivered a record-setting attritional combined ratio of 90.3%.
• These results reflect our relentless focus on execution and the success of our nimble and disciplined underwriting, which reacts quickly to market conditions and best positions our portfolio for long term profitability.

Investments and Shareholders’ Equity

• Total invested assets and cash of $27.8 billion at September 30, 2021, 9.0% growth versus year end 2020
• Shareholders’ equity of $10.0 billion as of September 30, 2021
• Book value per diluted share of $253.40 at September 30, 2021 vs. $243.25 at December 31, 2020
• Excluding unrealized gains (losses) on fixed income investments, book value per diluted share of $242.83 at September 30, 2021, vs. $225.15 at December 31, 2020
• Common share dividends declared and paid in the quarter of $1.55 per share, equal to $61.5 million
• Common share repurchases of $160 million during the quarter, representing 625,358 shares at an average price of $255.43 per share

This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market and investment income fluctuations, trends in insured and paid losses, catastrophes, pandemic, regulatory and legal uncertainties and other factors described in our latest Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Everest Re Group, Ltd.

Everest Re Group, Ltd. (“Everest”) is a leading global provider of reinsurance and insurance, operating for close to 50 years through subsidiaries in the U.S., Europe, Singapore, Canada, Bermuda, and other territories.

Everest offers property, casualty, and specialty products through its various operating affiliates located in key markets around the world.

Everest common stock (NYSE:RE) is a component of the S&P 500 index.

Additional information about Everest, our people, and our products can be found on our website at www.everestre.com. All issuing companies may not do business in all jurisdictions.

A conference call discussing the third quarter results will be held at 8:00 a.m. Eastern Time on October 28, 2021. The call will be available on the Internet through the Company’s web site at everestre.com/investors.

Recipients are encouraged to visit the Company’s web site to view supplemental financial information on the Company’s results. The supplemental information is located at www.everestre.com in the “Investors/Financials/Quarterly Results” section of the website. The supplemental financial information may also be obtained by contacting the Company directly.

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The Company generally uses after-tax operating income (loss), a non-GAAP financial measure, to evaluate its performance. After-tax operating income (loss) consists of net income (loss) excluding after-tax net realized capital gains (losses) and after-tax net foreign exchange income (expense) as the following reconciliation displays:

Although net realized capital gains (losses) and net foreign exchange income (expense) are an integral part of the Company’s insurance operations, the determination of net realized capital gains (losses) and foreign exchange income (expense) is independent of the insurance underwriting process. The Company believes that the level of net realized capital gains (losses) and net foreign exchange income (expense) for any particular period is not indicative of the performance of the underlying business in that particular period. Providing only a GAAP presentation of net income (loss) makes it more difficult for users of the financial information to evaluate the Company’s success or failure in its basic business and may lead to incorrect or misleading assumptions and conclusions. The Company understands that the equity analysts who follow the Company focus on after-tax operating income (loss) in their analyses for the reasons discussed above. The Company provides after-tax operating income (loss) to investors so that they have what management believes to be a useful supplement to GAAP information concerning the Company’s performance.

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